Indonesian Coffee Co-op Brews Success

MOUNT PUNTANG, Indonesia—Surrounded by volcanoes that make the soil here some of Indonesia’s most fertile, members of the Klasik Beans cooperative sniff, sip and swish tiny cups of coffee like a sommelier would a coveted vintage.

The motley crew, many of them search-and-rescue volunteers, talks proudly about its efforts to produce the perfect flavors and cultivate new varieties. Klasik, which specializes in rare, high-end coffees, is known for its Sunda Hejo, a rich, forest-flavored Arabica that has put it on the map among specialty coffee buyers.

It is one of four main varieties the cooperative is promoting in an effort to help remake Indonesia’s coffee industry, which some specialty producers say still views the crop as a mass-produced commodity, much like coal or palm oil, rather than something for human consumption.

“If you think of coffee as a commodity and not as a beverage then you will treat it like corn for a chicken,” said Eko Purnomowidi, one of Klasik Bean’s co-founders.

Indonesia, which has been growing coffee since it was brought here by Dutch colonizers in the 17th century, is the world’s third-largest coffee producer after Brazil and Vietnam, both of which dwarf Indonesia in export volumes. Brazil exported around 31.6 million 60-kilogram (132-pound) bags of coffee during the 2013/14 growing season, against Indonesia’s 9.7 million bags, the International Coffee Organization reported. Indonesian coffee exports reached $1.17 billion last year, according to the trade ministry.

But while coffee has grown so well in Java’s fertile soil that the island, now Indonesia’s most densely populated, has become synonymous with the word “coffee,” Indonesia’s reputation for producing high-quality coffee lags behind places like Colombia, Brazil and Ethiopia.

Indonesia produces mostly lower-grade Robusta beans, which sell for less than Arabica on international markets.

Mr. Purnomowidi and the core members of the cooperative are trying to change that by teaching farmers techniques that will improve the quality of the country’s coffee and help its farming communities make a living wage.

Klasik started in 2008 as a ragtag group of coffee aficionados, but it has developed a following among U.S. and European buyers. Whole Foods and micro-roasters such as Sweet Maria’s, Intellegencia and Four Barrels all buy coffee from the cooperative. Klasik exports about 90% of the coffee it produces, and as its reputation for high-grade coffee has grown, so have orders. Its export production volume has increased by 100 times to 400 metric tons since 2009, a year after it started with just a few dozen farmers, and now demand is exceeding supply.

Klasik hopes to double current production within two years. Next year it expects to more than double the number of farmers it works with to nearly 1,200.

Buyers say they appreciate what Klasik is doing.

“They’ve been elevating the processing” by better handling the farmers, “so they’re producing more ripe coffees and they’re teaching them to pick more specifically,” said Darrin Daniel, the director of sourcing for Allegro Coffee, a subsidiary of Whole Foods. “All those things add up to a better cup quality.”

Klasik fosters relationships with groups of farmers, teaches them about the health of the coffee, and how they can establish a successful business using methods that boost yields and quality.

It also helps connect farmers directly with buyers so buyers can see how the beans are grown and cared for, said Klasik Director Deni, who goes by one name.

Thompson Owen from Sweet Maria’s orders about 1,200 bags of coffee a year from Indonesia, buying mostly small lots of a few dozen bags from one specific area, mountain or farm group. He says specialty coffee has been selling for up to $1.90 over market prices. At the start of the month, average Robusta prices were $1.04/pound while the New York benchmark for Arabica was about 99 cents higher. Klasik has been selling its Sunda Hejo at around $3.60 a pound.

A lot of that money goes directly back to the farmers—on average, farmers who work with Klasik Beans make between 40 million-50 million rupiah a year ($3,240-$4,050), double the minimum wage in some rural areas.

And as word gets out that farmers with Klasik are earning far more than others, more have begun to approach the cooperative. In a hut perched on a mountainside above the village of Cempakamulia, farmer Ayi Sutedja, who once worked as an electrician, refers to coffee as “magic.”

Building up the specialty market, however, won’t be easy. Problems with farming and poor processing habits create barriers to quality and make Indonesia a riskier market, say industry observers. Like many coffee-producing countries, most coffee farming in Indonesia is done by disparate groups of small holders who must work with traders or layers of middlemen to get their coffee to market.

Moelyono Soesilo, the purchasing and marketing director for coffee exporter PT Taman Delta Indonesia and a member of the Association of Indonesian Coffee Exporters, admits that there are problems with quality. He says his company is working with farmers to increase yields while the association is focused on promoting Indonesian coffee to emerging markets like the Middle East.